There is a consensus in the mental health community that psychiatric inpatient care is overutilized and that ambulatory care is an effective way of treating persons diagnosed with serious mental illness in a community setting. Virtually all new community-based developments have been accompanied by research that has confirmed, for individuals included in these studies, the proposition that community-based care would lead to reduced use of inpatient care. However, macro-level studies of the impact of community-based care have not paralleled the findings for the individual. It is this paradox which the current research proposal intends to address. The specifics of this proposal are to quantify the relationships between the non-inpatient service delivery system and the utilization of the psychiatric inpatient care in New York State. These relationships will be modeled at the county level for the years 1987-1993, using both repeated cross-sectional and longitudinal techniques, expenditures and units of services and units will be utilized in the non-inpatient service system, while admissions and bed days will be used to measure psychiatric hospitalization. The resulting models may be used to evaluate system-level efficiency, and aid mental health planners in developing new systems.